Apple Inc. v. Samsung Electronics Co. Ltd.
5:11-cv-01846
N.D. Cal.Oct 22, 2017Background
- Apple sued Samsung for design-patent, utility-patent, and trade-dress infringement arising from iPhone design features (three relevant design patents: D618,677; D593,087; D604,305). Two jury trials (2012, 2013) produced verdicts and damages awards; later appeals and remands followed.
- The core legal question on remand is how to identify the “article of manufacture” under 35 U.S.C. § 289 (whether damages may be based on the entire end-product smartphone or on a component thereof) after the U.S. Supreme Court held the term can include either a product sold to consumers or a component. 137 S. Ct. 429 (2016).
- At trial Samsung argued (late) that § 289 damages must be limited to the specific component that embodies the claimed design (invoking older “Piano” decisions). The district court excluded a proposed instruction reflecting that view and instructed juries that total profit on the article to which the design was applied could be the entire product.
- The Supreme Court clarified § 289 requires (1) identification of the article of manufacture, and (2) calculation of the infringer’s total profit on that article, but declined to prescribe a test for step 1. The case returned to the district court for a test and for determination whether jury instructions were legally erroneous and prejudicial.
- The district court adopts a four-factor multifactor test (from the U.S. Solicitor General’s amicus proposal) to identify the relevant article of manufacture and allocates burdens: plaintiff bears burden of persuasion and initial production to identify the article and prove total profit; if plaintiff meets initial production burden, defendant must produce evidence of an alternative article and any deductible costs.
- The court held the prior jury instructions were legally erroneous and prejudicial because they failed to inform the jury that the article of manufacture could be something less than the entire phone; the court ordered a new damages trial for the three design patents.
Issues
| Issue | Plaintiff's Argument (Apple) | Defendant's Argument (Samsung) | Held |
|---|---|---|---|
| Proper test to identify the “article of manufacture” under § 289 | Adopt a multifactor test (visual contribution, physical/conceptual distinctness, sales/accounting evidence, intent to copy) but allow flexibility | Limit inquiry to the specific part that corresponds to claimed attributes; exclude parts not claimed | Adopted the Solicitor General’s four-factor test (scope of claimed design; relative prominence; conceptual distinctness; physical relationship/separability) — Apple’s intent factor rejected; Samsung’s overly strict approach rejected |
| Who bears burden of persuasion and production to identify the relevant article and total profit | Plaintiff should bear initial burden; then shift to defendant for alternative article and deductions; plaintiff ultimately bears persuasion | Plaintiff should bear both persuasion and production (no special shift to defendant) | Plaintiff bears burden of persuasion and initial production; once plaintiff meets production burden, burden of production shifts to defendant to offer alternative article and prove deductible expenses |
| Whether jury instructions at trial were legally correct about article of manufacture | Existing instructions were adequate (Apple argued lack of evidence for smaller article) | District court’s exclusion of alternative-article instruction was error and prejudiced Samsung | Jury instructions were legally erroneous and prejudicial because they omitted that the article of manufacture could be a component; new damages trial ordered |
| Adequacy of trial evidence to support instruction that article could be less than entire phone | Apple argued Samsung failed to identify a smaller article or profit allocation at trial, so instruction was unwarranted | Samsung pointed to patents, component/assembly testimony, teardown exhibits, and damages-related evidence (including Apple expert analyses) as sufficient foundation | Court found a sufficient evidentiary foundation existed to have instructed the jury that a lesser article might be the relevant article of manufacture |
Key Cases Cited
- Dobson v. Hartford Carpet Co., 114 U.S. 439 (explaining need to apportion under earlier law prior to statutory change)
- Dobson v. Dornan, 118 U.S. 10 (same line of cases prompting congressional remedial statute)
- Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437 (Fed. Cir.) (discussing § 289 history and that Congress removed apportionment requirement)
- Schaffer v. Weast, 546 U.S. 49 (discussing burden-of-proof norms and burdens of persuasion/production)
- Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir.) (design-patent infringement framework and burden allocation for certain defenses)
- Micro Chem., Inc. v. Lextron, Inc., 318 F.3d 1119 (Fed. Cir.) (burden-shifting in lost-profits context)
- NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir.) (standards for reversal based on erroneous jury instructions)
- Samsung Elecs. Co. v. Apple Inc., 137 S. Ct. 429 (U.S.) (Supreme Court ruling that § 289’s “article of manufacture” can be an end product or a component; two-step damages framework)